Have you ever wondered if everything you’ve been told about success in the markets is wrong?
What if the secret to success in the stock market isn’t just buying the “next Amazon” or the “next Nvidia?” We know that’s what everyone dreams about. That’s why you see that in the marketing messages over and over again.
Here is some unconventional wisdom to consider as you try to grow your wealth….
It’s less about what stocks you buy and more about how you manage them that will truly make a difference in your wealth.
That seems counterintuitive. Picking the right stocks isn’t the most important thing?
It’s not.
It’s like believing that the road to success is always just about doing more. Success is about choosing what you do and managing your career.
More effort by itself is not a guarantee of success.
Legendary New York Yankee Yogi Berra said it well, “You don’t have to swing hard to hit a home run. If you got the timing, it’ll go.”
We’re all familiar with examples of the importance of timing.
Our food supply depends on timing. We just passed the autumnal equinox, the day when we shift from summer into fall. For farmers, it’s time to harvest things like tomatoes, sweet potatoes, apples and, yes, pumpkins.
Good comedy depends the perfect timing for the punch line.
Musicians need to know exactly the right time to come in with their instrument, and how to stay in sync with the other members to create the optimal performance.
The same thing applies to your portfolio.
The Dreaded Round Trip
If you’re like most investors, you’ve gotten the timing wrong and held a stock for too long.
Stocks that experienced accelerated gains in the wake of the COVID lockdowns provide several great examples.
One of them is Zoom Video Communications Inc. (ZM).
Zoom is, of course, the video conferencing service still used today by many businesses and individuals. When we were all faced with working from home and staying in touch with friends and family only remotely, Zoom became a big part of our lives.
And, of course, the stock soared. Below is a chart of ZM’s stock price from the first lockdowns in late March 2020 to one year later.
Even if you bought the stock in April or May would still have seen gains over 150%.
And the future looked bright. People became accustomed to using the tech. Many workplace experts predicted working from home would be the new norm.
But in the next year, the market normalized. COVID vaccines were developed. And – bottom line – folks really wanted to be in person again.
Here is the ZM chart again but covering two years.
It’s easy to see the kind of roundtrip too many investors suffered if they didn’t exit at the right time.
And it’s easy to imagine someone who was once up more than 200% hanging on to a stock once it starts to go down, hoping to regain some of the “lost” gains. You can easily see it happening in the chart above around mid-2021 when the stock went up again for a few months.
No one should feel too bad about this. We’ve all done it.
We’re only human, prone to making decisions out of fear and greed.
In your efforts to grow your wealth, stock picking is only part of the battle. No matter how good your entry point, none of it matters if we hold on to a stock too long and don’t preserve our gains.
Getting the timing right
Long-time Digest readers are familiar with our friend, and macro investing expert Eric Fry.
Across his 30-year career, he has made dozens of bold calls resulting in big gains for his readers, including warning about the dot-come bubble before it burst, to sounding the alarm on the 2022 tech crash months before it happened.
His ability to see what’s coming next is why he has such an impressive record picking stocks that soar 1,000% or more.
And he hasn’t done that just a few times, but 41 separate times.
Last week, Eric held a special event that wasn’t about picking stocks. Instead, it was about helping people with a tool to help them manage their picks.
Here he is explaining why the event was so important.
Because the way many, if not most, investors approach the market is completely wrong – and it’s a potential setup for failure.
We are on the precipice of a series of huge, market-changing events: recession rumors, one of the most contentious elections in U.S. history, the staggering cost of living and more. It’s all a perfect storm for the most bruising losses of some investors’ careers.
However, this isn’t all doom and gloom. There is a way to prevent this fate – and even emerge in a better spot than you were before.
The stock market has had a great year so far – up more than 20% in 2024 as I write Friday morning – and I hope you’ve been in on the gains.
But it doesn’t take much to see that there could be more instability in our near future. The highly contentious election threatens to bring more chaos into 2025 … the Fed’s rate cutting could reignite inflation … war in Europe and the Middle East could widen and threaten energy supply chains … and AI will build up and tear down businesses at a record pace.
Spending more time on stock picking than managing those picks is a recipe for trouble.
At The Great 2024 Sell-Off event, Eric reveals a straightforward way to determine the optimal time to buy a stock before it goes on a huge run, and how you can use the same method to determine the best time to take profits off the table before an investment heads south.
You can bet folks who held on the Zoom for two years could have used it.
Check out the recording of The Great 2024 Sell-Off event by clicking here.
Enjoy your weekend.
Luis Hernandez
Editor in Chief, InvestorPlace
